in Chile

Advice for Incoming Start-Up Chile Teams: Reimbursements, Beneficiary, etc.

Congratulations to the 154 teams recently selected for the next round of Start-Up Chile! You are in for an amazing entrepreneurial adventure. I look forward to meeting you.

I’ve received a few emails from soon-to-be-@startupchile-ites and I decided to post them here to make them easy to find.

I suggest that you start with these two posts:

First Impressions of Chile — In Photos!

The Top 10: Why Start-Up Chile Rocks

Also read Canadian entrepreneur Ken Seville’s post on the same topic. 

Here are some questions from incoming teams and my answers. Sorry they are a tad rough. I’m running out to go give this speech in Viña de Mar tonight. 

 

What does the $40K grant include? we’ve read different versions of the split. Are minimum salaries for founders included or excluded?

The grant can cover travel expenses, rent, business expenses (like hosting, legal fees, phones, visas, etc.) Start-Up Chile only reimburses 90% of approved expenses. That means if you buy a $1000 plane ticket, Start-Up Chile will give you $900. This means that you need to spend $44,000 on approved expenses in order to receive $40,000 in reimbursements.

Yes, you can opt to receive a salary of 350,000 pesos (I think) which is about $700 but I believe that 10% taxes are taken out of this. We all need to register within Chile’s tax system and this takes a bit of patience but it’s pretty straightforward.

For information on finding an apartment, read Yifan’s post on the topic or check out ContactChile. 

 

What’s the process on reimbursement like:
timewise: do you need to wait long before getting money back?
restriction wise: are there strict guidelines as to what can be reimbursed, and what not?

Yes, it takes a while. We received our first reimbursement about 2 months after arriving in Chile (I think other groups got theirs a little sooner, but we had some delays due to miscommunications on our side). The people who work on the reimbursements are nice and organized and they work hard to make it as easy as possible. But since it’s government money it takes time and there are restrictions. For example, food is not covered. Moving expenses for a family,  a spouse’s visa, and language lessons are also not covered.

I think it’s important to come to Chile with enough money to live on for 2 months, including all your business expenses (paying contractors, lawyers, etc.) Be prepared for that. Come with $10,000. I have a Bank of America account and I can withdraw cash from ScotiaBank without paying any fees.

 

Would you know how the reimbursements work when there are two co-founders for a startup? (SUC talks about labeling one as the Beneficiary and only making payments for receipts against his/ her name.)

Yeah, each team has one Beneficiary, and this person signs an official contract with the Chilean government. All of the reimbursements go into this person’s account and then this person is responsible for transferring the money to the other team members. I recommend that the person who is most patient and responsible with money be the Beneficiary.

I wish I had understood this better when I first landed in Chile.

 

So, just to understand this condition better. For the 2 of us flying into Santiago, would both our tickets be reimbursed into 1  persons account?

Yes, the money for both tickets would be reimbursed into one person — the Beneficiary’s account, and that person is responsible for distributing it from there.

If you buy something on a credit card, you need the purchase receipt as well as your bank statement that says you paid the bill for that exact amount. It is a bit tedious, but definitely doable.

 

If you could improve the Start-Up Chile program; what would you change?

I wish the money situation was quicker and smoother and more flexible. But that is not enough of a bother to make me question the value of the program, and the staff is working incredibly hard to make it smoother and easier. See my earlier Top 10 post about why the program rocks. 

 

How easy is it to leverage the connections of the SUC network? (Government agencies, ministries, local businesses, schools, universities, etc) Does the SUC badge help significantly in opening doors?

Super easy. This is a small country with rather strong social networks, and I’ve never been turned down for a meeting. One team has had great luck walking straight into the offices of major non-profit organizations for an impromptu coffee-and-chat with the Program Director. They said it was more because of the “gringo factor” than Start-Up Chile per se, but the government is so powerful in this country and introductions matter a lot. The Start-Up Chile staff is very well-connected and works hard to make the most of this. A top university’s department of industrial engineering invited me to give a talk after we met just once at a public event. Here are the slides. I am going to be leading DE-PE at the same university starting early next year. Start-Up Chile pairs each team up with a padrino (godfather) which is a local businessman who has volunteered to be the main point of contact for questions about day-to-day life in Chile and more.

 

BOTTOM LINE: 

If your only motivation for coming to Start-Up Chile is to get forty thousand bucks, I suggest you reconsider. I think there are less involved ways to obtain $40,000, such as working overtime or asking the right millionaire for a big check.

The non-monetary benefits of the program — working with and alongside entrepreneurs from all over the world, gaining access to Chile’s most amazing group of professionals (the Start-Up Chile team and their enormous network of contacts), and the opportunity to live in one of the world’s most gorgeous and fascinating countries — are priceless!

 

If you have more questions, feel free to leave a comment or email me at leslieforman at gmail dot com. 

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  1. Leslie, one question: Do you pay income taxes on the reimbursed money? I’m asking this because the money comes to your personal Chilean bank account, right? Or is the proof of expense to SUC enough to convince Chilean tax authorities there is no real income?

  2. @Kedar. Thanks!

    @pj. I believe that you pay income taxes only on the 350.000 CLP/month salary (should you choose to take it) and it’s taken out before it lands in your account. I think there is a way to get part of it reimbursed after the end of the year, but I am not 100% sure because we haven’t gotten that far yet. I don’t think you have to pay taxes on the amounts that are reimbursed off of receipts, but Start-Up Chile does only reimburse you for 90%. This means that if you spend $1000 on a plane ticket, $900 of that will be reimbursed into your Chilean bank account. Hope that helps! Where are you from and what is your project? I look forward to meeting you.

  3. Hello Leslie, Thanks a ton for your insight and advice. I had quite a trivial question, can hardware be reimbursed? I ask because my current workstation is at the end of its life-cycle and I was wondering if I should buy something right away or wait and procure in Chile and look to get it reimbursed.

  4. @AB. Good question. Yes, hardware can be reimbursed. For example, if you want to buy a computer, I am pretty sure you can buy it in your home country. Save your receipt and pay with a credit card. Then when you pay your credit card bill, print out the bank statement showing the exact amount that you paid for the computer. This could be in dollars or euros or something else, not necessarily Chilean pesos. Hope that is helpful!!

    I look forward to meeting you!

  5. Many thanks Leslie. You are a hacker! Looking forward to meet you.

  6. Hi! WE NEED ADVICE!

    We’ve also won StartupChile, and we are going there on January, BUT… We are having trouble renting houses/apartments there.

    How did you managed to fulfill all the requirements to rent a property? The real states need a working contract to allow us to rent a property (which we do not have)…

    So if you can help us with some info, send us a mail to fer@ferfolio.com

    Thanks!

  7. Hi Leslie,

    Thanks for your blog post! We are from California too. so in your experience, should the reimbursed money be taxed as part of the US taxable income? Thanks!

    cl